The Pradhan Mantri Mudra Yojana (PMMY) is a government scheme that provides financial support to small and micro-enterprises. Learn about its benefits, eligibility criteria, and FAQs in this comprehensive article.
Small businesses are the backbone of the Indian economy, contributing to over 40% of its GDP. However, these businesses often face financial constraints and are unable to access credit from traditional sources like banks.
This is where the Pradhan Mantri Mudra Yojana (PMMY) comes in. In this page, we will explore the various aspects of PMMY, including its objectives, eligibility criteria, and benefits, and how it has been successful in empowering small businesses in India.
PM Mudra Yojana (प्रधानमंत्री मुद्रा योजना) was launched on April 8, 2015, by Prime Minister Narendra Modi to facilitate easy collateral-free micro-credit of up to Rs 10 lakh to non-corporate, non-farm small and micro-entrepreneurs for income-generating activities.
Loans under PMMY are provided by Member Lending Institutions (MLIs) – banks, non-banking financial companies (NBFCs), microfinance institutions (MFIs) and other financial intermediaries, the finance ministry said in a statement on Saturday.
What is PMMY?
Pradhan Mantri Mudra Yojana is a government scheme launched in 2015 to provide financial support to small businesses in India. The scheme aims to provide loans up to Rs. 10 lakhs to non-corporate, non-farm small/micro-enterprises.
The loans are provided by banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs) registered under the scheme.
Objectives of PMMY
The main objective of PMMY is to provide financial assistance to small businesses in India, especially those owned by women, Scheduled Castes (SCs), and Scheduled Tribes (STs). The scheme also aims to promote entrepreneurship and generate employment opportunities in the country.
| Name of the Scheme | Pradhan Mantri Mudra Yojana |
|---|---|
| Title | Check the Pradhan Mantri Mudra Yojana (PMMY) Details |
| Subject | Govt Of India launched the Mudra Yojana |
| Category | Scheme |
| Website | https://www.india.gov.in/ |
| Schemes Portal | https://www.mudra.org.in/ |
| PM Mudra Yojana Application | PM Mudra Yojana Application Form |
PMMY Eligibility Criteria
To be eligible for a loan under PMMY, the borrower should be:
- The applicant must be a citizen of India.
- The business for which the loan is being applied must be in the manufacturing, trading, or service sector.
- A small/micro-enterprise in the manufacturing, trading, or service sector
- A proprietorship, partnership, or private limited company
- A borrower who has not defaulted on any previous loan from any bank or financial institution
- The business must be registered under the Goods and Services Tax (GST) or have a Unique Identity Number (UIN).
- The borrower must not have defaulted on any loans or credit card payments in the past.
Types of Loans
Under PMMY, loans are provided in three categories:
Shishu: Loans up to Rs. 50,000 are classified as Shishu loans. These loans are meant for small businesses that are in their early stages and need only a small amount of capital to get started.
Kishor: Loans ranging from Rs. 50,001 to Rs. 5 lakhs are classified as Kishor loans. These loans are meant for businesses that have already established themselves and need more capital to expand their operations.
Tarun: Loans ranging from Rs. 5 lakhs to Rs. 10 lakhs are classified as Tarun loans. These loans are meant for well-established businesses that need a significant amount of capital to take their operations to the next level.
Benefits of PMMY
The Pradhan Mantri Mudra Yojana has several benefits for small businesses in India. Some of these include:
- Easy access to credit: PMMY has made it easier for small businesses to access credit from formal sources like banks and MFIs.
- Competitive interest rates: The interest rates on PMMY loans are competitive and lower than those charged by informal sources like moneylenders.
- No collateral required: PMMY loans do not require any collateral or security, making it easier for small businesses to access credit.
- Flexibility in repayment: PMMY loans offer flexible repayment options, including the option to repay the loan in monthly, quarterly, or half-yearly instalments.
Success of PMMY
Since its launch in 2015, PMMY has been highly successful in providing financial assistance to small businesses in India. As of March 2021, the scheme had disbursed loans worth Rs. 17.9 lakh crores to over 28 crore beneficiaries. The scheme has also been successful in promoting entrepreneurship and generating employment opportunities in the country.
Frequently Asked Questions (FAQs)
Who is eligible for a loan under PMMY?
Small/micro-enterprises in the manufacturing, trading, or service sector that are non-corporate, non-farm and have not defaulted on any previous loan from any bank or financial institution.
What is Pradhan Mantri Mudra Yojana?
The Pradhan Mantri Mudra Yojana (PMMY) is a government scheme is to provide financial support to small and micro-enterprises in the country. The PMMY provides loans of up to Rs. 10 lakhs to these businesses, which can be used for various purposes such as business expansion, purchasing machinery, or working capital.
What is the maximum loan amount under PMMY?
The maximum loan amount is Rs. 10 lakhs.
What is the interest rate for PMMY loans?
The interest rate for PMMY loans varies depending on the lending institution but is generally competitive and lower than those charged by informal sources like moneylenders.
Are collateral or security required for PMMY loans?
No, PMMY loans do not require any collateral or security.
What are the repayment options for PMMY loans?
PMMY loans offer flexible repayment options, including the option to repay the loan in monthly, quarterly, or half-yearly instalments.
Can a borrower apply for multiple loans under PMMY?
Yes, a borrower can apply for multiple loans under the PMMY, provided they meet the eligibility criteria.
What is the repayment period for loans under PMMY?
The repayment period varies depending on the loan amount and the borrower's preference. However, it is generally between 3 to 5 years.
Conclusion
The Pradhan Mantri Mudra Yojana has been a game-changer for small businesses in India, providing them with easy access to credit and promoting entrepreneurship. The scheme has been particularly beneficial for women entrepreneurs and those belonging to marginalized communities, who have traditionally faced greater barriers in accessing credit.
PMMY has also helped formalize the informal economy by encouraging small businesses to access credit from formal sources and reducing their dependence on moneylenders.